Proposed Avandia Settlement Would Pay U.S. $3B for Off-Label Marketing

GlaxoSmithKline and the federal government have reached a tentative $3 billion settlement over Avandia marketing charges, alleging that the company promoted the controversial and dangerous diabetes drug for uses that were not approved by the FDA or determined to be safe and effective. 

The Avandia settlement was announced on Thursday in a statement by Glaxo officials, who said they expect to finalize terms of the agreement next year, along with other cases that it defines as its most significant U.S. liabilities. If approved, the blockbuster settlement would be the largest ever for a drug company accused of illegal marketing.

The U.S. Department of Justice (DOJ) has accused GlaxoSmithKline of trying to secretly market Avandia for uses other than what it was approved for by the FDA, an illegal tactic known as off-label marketing. The DOJ began investigating Glaxo in 2004 for both off-label marketing and Medicaid fraud.

The DOJ has not commented on the proposed settlement or the charges, and it is not clear whether the settlement would address the Medicaid fraud charges, which claim Glaxo overcharged the government.

Previously, the largest off-label marketing settlement was held by Pfizer, which paid the federal government $2.3 billion in 2009 for illegally marketing a number of drugs, including Bextra. At that time it was the largest criminal fine in U.S. history.

Critics of pharmaceutical companies have called for fines to be larger, enough to financially hurt the companies and thus deter illegal activities. They have also called for more corporate executives to face actual jail time over illegal business decisions.

Avandia was first introduced in 1998 to treat type 2 diabetes by helping control blood sugar levels. The drug was used by millions of diabetics throughout the world before sales began to plummet in mid-2007, after a study published by the New England Journal of Medicine highlighted the potential Avandia heart risks.

A “black box” warning was added to Avandia in the United States in November 2007, but many critics continued to argue that the warning was not strong enough and called for an Avandia recall to be issued because the risks appeared to greatly outweigh any benefit provided by the medication.

Despite a growing body of evidence pointing to increased risk of heart attacks and death on Avandia, the FDA decided in September 2010 not to recall Avandia in the United States. Instead, the FDA allowed the medication to remain on the market with severe restrictions on who can use the product.

In May, the FDA put those restrictions on Avandia in place, announcing that the medication will only be available from select pharmacies by mail order and special educational programs will be required before the drug can be prescribed.

In recent years, GlaxoSmithKline has faced thousands of Avandia lawsuits that were filed throughout the United States by individuals who allege that the drug maker failed to adequately warn about the risks associated with Avandia. Thousands of individuals have received a settlement for Avandia injuries, a number of cases are still pending in courts throughout the country.